Effective resource management is crucial for growth and profitability, particularly in professional services businesses. When human resources represent your most significant expense and resource limitations dictate your workload capacity, utilizing those resources efficiently becomes vital.
Proactive resource management can significantly reduce costs, boost profits, and create opportunities to take on additional projects. However, many businesses need help with the fundamentals of resource management.
To help you overcome these challenges, here are 6 essential best practices for resource management that can drive better outcomes for your project-based business. Implementing these expert recommendations will fuel growth and enhance profitability.
1. Centralize resource planning –
The foundation of effective resource management is centralization. You can utilize your resources optimally if you don’t know the availability of resources across the organization. In larger enterprises, hybrid teams, or businesses combining local and global resources, it is increasingly complex to keep track of every single entity. But it would help if you had visibility into your entire team.
For example, Project A could face delays waiting for a Frontend developer while a qualified developer sits idle elsewhere in your organization, waiting for an assignment. This scenario exemplifies how poor resource management can delay revenue generation on one hand and waste financial resources on the other—a double whammy that could easily be avoided with centralized resource management.
The solution begins with creating a centralized resource pool—a single source of information about all resources in the organization. This pool should include –
- Resource name, job title, and location
- Skills and seniority
- Working pattern/availability
- Cost to the business
KestrelPro is a dynamic resource allocation tool that offers a comprehensive overview of everyone’s workload on various projects. It allows you to track time, utilization, and forecast capacity all in one place.
With this centralized information, project managers can efficiently request and allocate the most suitable resources for their projects from across the entire organization, ensuring optimal resource utilization and project efficiency.
This approach helps to:
- Maximize resource utilization
- Create a balanced workload
- Identify spare capacity
- Reduce the risk of project delays
Centralization goes beyond just creating a centralized resource pool. It also involves implementing centrally managed processes, such as:
Project prioritization: Determining the most important or urgent projects
Resource request: Allocating resources from the central pool
Change request: Reallocating resources to reduce conflicts
In larger organizations, these processes might be overseen by a Project Management Office (PMO) or dedicated resource managers.
Raising awareness for improved resource management and creating transparency in the process ensures that everyone understands how and why decisions are made regarding resource allocation.
Conclusion – When your resources aren’t earning money, they burn money. Businesses that optimize billable hours achieve the highest ROI from their investment. Effective resource management not only maximizes billable hours but also protects profits and accelerates revenue realization by minimizing schedule and budget variances.
2. Keep a note of available Skillset
Once you’ve centralized your resource pool, you need to keep it up to date—especially skills information. According to a study, a well-designed and maintained skills database is a key success factor in resource management.
If you don’t keep skills information up to date, you could miss opportunities to allocate work to people who have completed training, upskilled, or reskilled. Your business might have more skills—and resource capacity—at your disposal than you realize.
To keep your skills database updated, firstly, make sure staff are encouraged to keep their skills info up-to-date. Ensure you also have a mechanism for their manager to check and validate that the information they’ve provided is correct.
Secondly, don’t just focus on hard skills like product or platform knowledge. Soft skills are equally important. The RMI found only 26% of businesses record soft skills. But skills like leadership and conflict management can make or break a project.
As per a report a high-performing enterprises empower their people to develop ‘power skills’ like collaborative leadership and innovation.
These result in ‘higher levels of organizational agility, more standardized risk management practices, and less project scope creep… all contributing to better project performance.’ So, add soft skills to your resource records, too.
Finally, don’t just track people’s skills. Record the skills they want. That way, you can identify opportunities to match people to projects that will expand their expertise.
This is beneficial not only in terms of upskilling employees but also keeps them engaged and supports your retention strategy. RMI reports that one-third of businesses don’t do this yet.
Therefore, a skills database helps allocate the right people to the right jobs at the right time. It significantly reduces recruitment costs and develops your workforce by providing a focus for training programs.
The cross-functional skill sharing has gained prominence.
The practice of cross-functional skill sharing has become increasingly important, allowing expertise from one department to benefit another. This approach is not just about redistributing skills; it represents a holistic strategy. Leading organizations are showing a solid dedication to their employees. They explore individual interests, identify opportunities for growth, and create a workplace atmosphere that turns working hours into enjoyable and engaging experiences.
3. Prioritize profitable projects
You aim to deliver your best work for every client, but not all projects carry the same weight. Some projects stand out due to their high profile, substantial value, potential to establish a crucial client relationship, or ability to steer your business in a new direction. These projects require VIP treatment, which means assigning your top resources to them.
Project prioritization helps you identify these key projects, ensuring that resources are allocated where they can provide the most value. Here are the basics:
If prioritizing projects is challenging, consider using scenario planning. Scenario planning involves comparing different scenarios side-by-side to understand their implications. In the context of projects, this means examining various project combinations to see how they affect resource capacity, utilization, and other key performance indicators. This process can help you optimize your project portfolio.
The project prioritization enables strategic resource allocation. Over time, it helps you recognize what constitutes a profitable, ideal project for your business.
4. Optimize your MVPs –
Here, MVP denotes the most valuable players who are the key resources for driving your business forward. Typically, these are experts whose experience and expertise add significant value to the projects they undertake. Everyone wants their input, but their time is limited.
These MVPs must be prioritized, protected, and retained. Ensure they are allocated to high-priority projects rather than low-value tasks simply because someone claimed them first. Project prioritization and resource request workflows can help manage this effectively.
Use resource utilization rates to identify which people, skills, and roles are in the highest demand. Match your MVPs to your prioritized project list so they can contribute where they add the most value. Proactively manage their allocation to maximize engagement and productivity, and monitor resource demand to know when to recruit more of the same skills.
Generate value through their unique expertise. Assigning them to the highest priority projects ensures their skills have the greatest impact—whether it’s delighting your top clients or successfully delivering complex projects. Use their talents wisely.
Forecast your plans with data-driven insights
Project overruns can severely impact profit margins, client goodwill, and your reputation while disrupting other project plans. According to Deloitte, 60% of projects are either late, over budget, don’t deliver, or fail outright. There are many reasons projects can overrun, such as scope creep, client changes, and delays due to staff availability or absence. However, poor forecasting often sets some projects up for failure before they even begin.
Fortunately, resource management best practices can enhance the accuracy of your forecasts, mainly if you use resource management software that automates much of the process. These tools maintain records of historical project data, showing how long similar projects took, the resources they used, time tracking data, and whether they adhered to their forecasts or overran.
Project managers can leverage this information to create more realistic plans and resource allocations from the outset, reducing the risk of variances. Additionally, resource management software enables PMs to monitor project performance in real-time, comparing planned versus actual schedules and budget burn rates, allowing for timely course corrections if needed.
Data-based forecasting offers substantial advantages. Project budgets become more accurate, protecting profit margins. Schedules are more realistic, reducing the risk of overruns and disruptions to subsequent work. Clients are more likely to be satisfied and surprised by changes.
5. Manage Surface capacity
Resource management extends beyond addressing immediate needs; it also involves strategic planning for the future. A proactive approach to capacity planning and resource management can:
- Reduce costs
- Minimize redundancy
- Uncover saleable capacity
- Help build a workforce ready for future challenges
Strategic capacity planning involves forecasting and meeting your business’s future resource needs. This means assessing your current resource capacity to determine how much additional work you can take on and whether you need to adjust your workforce to meet your goals.
Use KestrelPro reports to identify capacity for future projects. Capacity forecasting allows you to make timely decisions about hiring more workers, downsizing your team, or retraining staff in redundant roles. This approach reduces unnecessary costs associated with hiring and firing. For instance, it gives you the lead time to hire a permanent staff member instead of bringing in a contractor at the last minute or retraining staff rather than making them redundant.
By strategically managing resource capacity, you ensure you have the personnel needed to deliver current and upcoming projects on time and within budget.
Moreover, identifying spare capacity can be profitable. If you need more utilized capacity and resources, you can pitch for new projects to fill the gap. This is much easier with resource management tools that provide a clear visualization of resource utilization and capacity.
Capacity forecasting supports optimal resource allocation for future projects, ensuring they are delivered on time and within budget. It also reduces waste associated with underutilization, reactive hiring, and redundancy while uncovering opportunities to take on additional work.
6. Use modern solutions
If you’re using spreadsheets for resource planning, you’re making things far more complex than they need to be. While using a free tool like Excel might seem cost-efficient, it’s actually a false economy that wastes time and money and limits agility.
Adopting appropriate resource management tools will boost the efficiency, accuracy, and speed of your resource management process, aligning with PMI recommendations. There are many alternatives to spreadsheets for resource planning, such as Runn. These tools offer intuitive features that help you make faster, more confident, data-informed decisions about resource management.
For example, Runn resource planning software enables you to:
- View all your resources in one central location
- Filter and find resources based on skills, roles, capacity, and more
- Easily drag and drop resource bookings
- Assess the impact of resource decisions on budget, schedule, utilization, capacity, and more
- Gain granular, at-a-glance insights through an intuitive dashboard
- Access strategic overviews and reports
- Track allocated-vs-actual metrics to manage variance and costs
- Run various scenarios to optimize your project pipeline
- Track time automatically, improving invoicing speed and accuracy
- And much more
Resource management software facilitates the implementation of resource management best practices. It pays for itself by reducing the time spent extracting actionable data from static spreadsheets. It provides dynamic, real-time resourcing insights that empower quick, confident, data-based decisions, driving your business’s profitability and growth.
Discover KestrelPro and how it can help you
If you’re ready to implement these resource management best practices in your business, do it right.
Try it today and see for yourself how easy it can make the resource planning process.